Question

Blossom, Inc., is a small company that manufactures three versions of patio tables. Unit information for its products follows: Table A Tables Tablec sales price 41 $ 59 Direct Material 7 Direct labor Vabimanufacturing overhead > mixed marutacturing verhand Required number o labor hours 0.50 0.50 1.00 Rogue Turbo E nachin hou houx 4.00 2.50 2.00 Blossom has determined that it can sell a limited number of each table in the upcoming year. Expected demand for each model follows: Table A Table B Table 50,000 units 20,000 units 30,000 unit Required: 1. Suppose that direct labor hours has been identified as the bottleneck resource. Determine how Blossom should prioritize production by rank ordering the products from 1 to 3. 2. Ir Blossom has only 40.000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. 3. Suppose that the number of machine hours has been identified as the most constrained resource. Determine how Blossom should prioritize production by rank ordering the products frorni 1 to 3. 4. Ir Blossom has only 233,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. If Blossom has only 40,000 direct labor hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first.) Product Table B Units Produced 20,000 50,000 Table A Table C If Blossom has only 233,000 machine hours available, calculate the number of units of each table that Blossom should produce to maximize its profit. (Enter the products in the sequence of their preferences; the product with first preference should be entered first.) Units Produced Product Table c Table B Table A

Answer 1

1		Table A	Table B	Table C
	Sales price per unit	$41.00	$45.00	$59.00
	Less:Direct materials	$7.00	$8.00	$9.00
	Less:Direct labor	$1.00	$3.00	$7.00
	Less:Variable manufacturing OH	$2.00	$2.00	$2.00
	Contribution margin(a)	$31.00	$32.00	$41.00
	Labor hours per unit(b)	0.50	0.50	1.00
	Contribution margin per labor hour(a/b)	62	64	41
	Ranking based on a/b	2	1	3
2	Maximum no. of units produced	50,000	20,000	30,000
	Maximum labor hours	25,000	10,000	30,000
	Allocation of 40,000 hours based on Ranking	20,000	20,000	-
	Units produced after allocation(Allocated hours / Labor hours per unit)	40,000 units	20,000 units	0 units
	Final Answer is
	Product	Units Produced
	Table B	20,000 units
	Table A	40,000 units
	Table C	0 units
3		Table A	Table B	Table C
	Sales price per unit	$41.00	$45.00	$59.00
	Less:Direct materials	$7.00	$8.00	$9.00
	Less:Direct labor	$1.00	$3.00	$7.00
	Less:Variable manufacturing OH	$2.00	$2.00	$2.00
	Contribution margin(a)	$31.00	$32.00	$41.00
	Machine hours per unit(b)	4.00	2.50	2.00
	Contribution margin per labor hour(a/b)	7.75	12.80	20.50
	Ranking based on a/b	3	2	1
4	Maximum no. of units produced	50,000	20,000	30,000
	Maximum machine hours	200,000	50,000	60,000
	Allocation of 233,000 hours based on Ranking	123,000	50,000	60,000
	Units produced after allocation	30,750 units	20,000 units	30,000 units
	(Allocated hours / Machine hours per unit)
	Final Answer is
	Product	Units Produced
	Table C	30,000 units
	Table B	20,000 units
	Table A	30,750 units